Key account management

303

PRACTICAL EXERCISE

Cloverleaf plc
Cloverleaf plc was a UK-based supplier of bottling machinery used in production
lines to transport and fill bottles. Two years ago it opened an overseas sales office
targeting Germany, France and the Benelux countries. It estimated that there were
over 1,000 organisations in those countries with bottling facilities and that a key
sales push in northern Europe was therefore warranted. Sales so far had been disappointing with only three units having been sold. Expectations had been much
higher than this, given the advantages of their product over that produced by their
competitors.
Technological breakthroughs at Cloverleaf meant that their bottling lines had a
10 per cent speed advantage over the nearest competition with equal filling accuracy.
A key problem with competitor products was unreliability. Down-time due to a line
breakdown was extremely costly to bottlers. Tests by Cloverleaf engineers at their
research and development establishment in the United Kingdom had shown their
system to be the most reliable on the market.
Cloverleafs marketing strategy was based around high quality, high price competitive positioning. They believed that the superior performance of their product
justified a 10 per cent price premium over their key competitors who were all priced
at around 1 million for a standard production line. Salespeople were told to stress
the higher speed and enhanced reliability when talking to customers. The sales organisation in northern Europe consisted of a sales manager with three salespeople
assigned to Germany, France and the Benelux countries respectively. A technical specialist was also available when required. When a sales call required specialist technical assistance, a salesperson would contact the sales office to arrange for the technical
specialist to visit the prospect, usually together with the salesperson.
Typically, four groups of people inside buying organisations were involved in the
purchase of bottling equipment, namely the production manager, production engineer,
purchasing officer and, where large sums of money were involved (over 0.5 million),
the technical director. Production managers were mainly interested in smooth production flows and cost savings. Production engineers were charged with drawing up
specifications for new equipment and in large firms they were usually asked to draw
up state-of-the-art specifications. The purchasing officers, who were often quite powerful, were interested in the financial aspects of any purchase, and technical directors, while interested in technical issues, also appreciated the prestige associated
with having state-of-the-art technology.
John Goodman was the sales executive covering France. While in the sales office in
Paris, he received a call from Dr Leblanc, the technical director of Commercial SA, a
large Marseille-based bottling company that bottled under licence a number of key
soft drink brands. They had a reputation for technical excellence and innovation.
Goodman made an appointment to see Dr Leblanc on 7 March. He was looking forward to making his first visit to this company. The following extracts are taken from
his record of his sales calls.

304

Sales technique

March 7
Called on Dr Leblanc who told me that Commercial SA had decided to purchase a
new bottling line as a result of expansion, and asked for details of what we could
provide. I described our system and gave him our sales literature. He told me that
three of our competitors had already discussed their systems with him. As I was
leaving, he suggested that I might like to talk to M. Artois, their production engineer,
to check specifications.

March 8
Visited M. Artois who showed me the specifications that he had drawn up. I was delighted to see that our specifications easily exceeded them but was concerned that his
specifications seemed to match those of one of our competitors, Hofstead Gm, almost
exactly. I showed M. Artois some of our technical manuals. He did not seem impressed.

March 11
Visited Dr Leblanc who appeared very pleased to see me. He asked me to give him
three reasons why they should buy from us. I told him that our system was more
technologically advanced than the competition, was more reliable and had a faster
bottling speed. He asked me if I was sure it was the most technologically advanced.
I said that there was no doubt about it. He suggested I contact M. Bernard, the purchasing manager. I made an appointment to see him in two days time.

March 13
Called on M. Bernard. I discussed the technical features of the system with him. He
asked me about price. I told him I would get back to him on that.

March 15
Visited Dr Leblanc who said a decision was being made within a month. I repeated
our operational advantages and he asked me about price. I told him I would give
him a quote as soon as possible.

March 20
Saw M. Bernard. I told him our price was 1.1 million. He replied that a key competitor
had quoted less than 1 million. I replied that the greater reliability and bottling speed
meant that our higher price was more than justified. He remained unimpressed.

March 21
Had a meeting with Mike Bull, my sales manager, to discuss tactics. I told him that
there were problems. He suggested that all purchasing managers liked to believe
they were saving their company money. He told me to reduce my price by 50,000 to
satisfy M. Bernards ego.

Key account management

305

March 25
Told M. Bernard of our new quotation. He said he still did not understand why we
could not match the competition on price. I repeated our technical advantages over
the competition and told him that our 10 per cent faster speed and higher reliability
had been proven by our research and development engineers.

March 30
Visited Dr Leblanc who said a meeting had been arranged for 13 April to make
the final decision but that our price of 1.05 million was too high for the likes of
M. Bernard.

April 4
Hastily arranged a meeting with Mike Bull to discuss the situation. Told him about
Dr Leblancs concern that M. Bernard thought our price was too high. He said that
1 million was as low as we could go.

April 5
Took our final offer to M. Bernard. He said he would let me know as soon as a decision was made. He stressed that the decision was not his alone; several other people
were involved.

April 16
Received a letter from M. Bernard stating that the order had been placed with Hofstead
Gm. He thanked me for the work I had put into the bid made by Cloverleaf plc.

Discussion question
Analyse the reasons for the failure to secure the order and discuss the lessons to be
learnt for key account management.